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Please answer the following questions. The length of each answer should not exceed 250 words. (15 marks) Alex had bought X Company shares and invested
Please answer the following questions. The length of each answer should not exceed 250 words. (15 marks) Alex had bought X Company shares and invested $1 million in the company. Alex had decided to invest money in X Company based on Auditor's report. Mueller is the auditor of the X Company and had prepared Company's yearly financial statement. Mueller had written an annual profit of $12 million in the financial statement. After a few months of investment by Alex, the securities commission suspended trading, and when trading resumed, the price of each share went down substantially. Then Alex learned that the auditor's report was based on fraudulent information supplied by the management of X Company. The X Company had lost $20 million in that year instead of having a profit of $12 million. Alex came to know that Mueller was negligent for not detecting the accuracy. Alex sued Mueller (auditor) for negligence and claimed damage. Did Mueller owe a duty to Alex to be careful? Please explain.
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